Given the relationships between innovation and growth and between growth and longevity, it seems likely that new ideas have played a major role in increased longevity. This column examines the impact of medical innovation on cancer survival rates and mortality in the US. The findings suggest that a significant share of the increase in the five-year observed survival rate between 1994 and 2008 may have been due to an increase in the novelty of medical ideas several years earlier. Turning to the impact of new cancer drugs specifically, it finds that drugs launched in 36 countries during 2006-2010 reduced the number of disability-adjusted life years lost to cancer in 2015 in those countries by about 8.7%.

People with shorter life expectancies place more value on increases in survival than people who anticipate longer life spans. That may seem obvious, but economists have been making the opposite prediction for decades. This column demonstrates the mistake in the earlier theory and points out important policy implications, including that payers and governments are undervaluing investments in treating highly severe illnesses.

Total US prescription drug spending rose 13% in 2014, the biggest increase in a decade. Driving this trend is spending on branded specialty drugs, which rose an unprecedented 31%. This column discusses recent research into the relationship between inflation-adjusted launch prices and survival benefits and approval year for 58 anticancer drugs approved in the US between 1995 and 2013. The authors find that launch prices are going up by $8,500 per year, approximately 12% year over year.

US healthcare costs are under scrutiny. Americans have spent billions of dollars on cancer research in recent decades. Has it paid off? This column says that investments in cancer research and development have been quite worthwhile – producing a value to society far in excess of costs.